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A New Trend in Student Loan Policy?

The ramifications of defaulting on student loans are serious. Those who default may be sued for the entire amount of the loan, face garnished wages, ruin their credit or even have their professional licenses revoked, among other potential consequences.

As student loan debt grows, some states are considering rolling back sanctions for default. In Montana, Democratic State Rep. Moffie Funk introduced a bill that repealed the state’s right to revoke professional or driver’s licenses in the event of student loan default, which passed with bipartisan support. However, other states have chosen to maintain their right to revoke professional or driver’s licenses. Lawmakers in Iowa failed to pass a similar law earlier this year.

Proponents of these measures argue that revoking licenses further inhibits a defaulter’s ability to make loan payments. Opponents believe that the state’s ability to revoke licenses acts as a deterrent to default.

Regardless of whether a borrower graduated or was pleased with her education, the following states have the option to suspend some or all types professional licenses and certificates if a borrower defaults on student loan debt: